Calls for HMRC to simplify the UK’s tax system for self-employed and landlords

4th November 2019

A Government adviser has said that the UK’s tax system is causing issues for self-employed individuals and private landlords and therefore HM Revenue & Customs (HMRC) should consider simplifying it.

Due to the rise of the gig economy, there are now five million self-employed individuals, up from three million in 2000.

To help improve the Government’s tax system, organisations who hold data about the earnings of self-employed workers and private landlords should share it directly with HMRC.

The Government department should also develop the online accounts available to taxpayers so they can see all information regarding their different types of income in one place and should they wish to, make ad hoc payments towards their tax bill.

Currently, individuals file their online tax returns once a year; however, HMRC should look into whether people would prefer to report their information more regularly to HMRC using their online account.

The Office of Tax Simplification (OTS), an independent statutory body that aims to simplify the UK tax system, stated that the Government should explore these proposals in more depth.

Bill Dodwell, OTS Tax Director, said: “Too many self-employed people, and to some extent, private landlords, find it hard to understand tax and comply with [the tax system] so they end up having compliance failures and all the cost and worry that comes from that.”

Victoria Todd, Head of the Low Incomes Tax Reform Group, welcomes the introduction of a single digital account that would allow individuals to see all their tax and income information in one place. Currently, self-employed people have two such accounts: one for their business and one for their personal tax credits and benefits.

Ms Todd added: “This could pave the way for abolishing the payment on account regime, which many people find confusing and which often creates unexpectedly large tax bills.”